Spanish paper finds companies swap bankruptcy for foreclosure

Madrid city council

A working paper published by the Bank of Spain on September 25 analyses why Spain has one of the world's lowest bankruptcy rates.

The authors, Miguel García-Posada and Juan Mora-Sanguinetti, find companies based in the country hold mortgage debt as a "bankruptcy-avoidance activity". The paper says it reduces the probability of an institution filing for bankruptcy by between 29.1% and 35.3%, a much greater impact than for France and Britain.

Having creditors foreclose on a company's assets is

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